According to Young’s rep, IRS agents rolled up to the platinum-selling rapper’s house in Nashville this morning to go on a repossession rampage over the alleged tax debt — seizing assets like recording equipment, jewelry, furniture, his platinum wall plaques … and even his kids’ PlayStation.
Allegedly YB owes $300k in back taxes which isn’t the largest sum but it’s sizable enough. When TMZ asked Mr Buck how he got himself into such a pickle he responded, “This IRS situation came about because I trusted accountants, lawyers, and managers to handle my business for me while I focused on making music. From now on, I am going to stay on top of my own business.”
Hopefully this doesn’t mean that the music doesn’t suffer like the business did. We can’t imagine such a huge blow to the culture.
Reportedly, South Carolina gubernatorial candidate Nikki Haley likes to cite her experience as an accountant on the campaign trail.
That’s all well and good but now there are reports all over the web that Ms Haley has a helluva time filing her taxes on time and that she and her husband racked up some fines because of their tardiness. This, of course, has people freaking out because A) she’s running for public office and B) because she’s an accountant.
The AP reports, “Tax records released Wednesday by Haley’s campaign show she and her husband have filed their taxes late since at least 2004. Haley is a fiscal conservative and tea party favorite who cites her experience as an accountant on the campaign trail. The state legislator and her husband have been fined nearly $4,500 over five years. Haley’s spokesman Rob Godfrey says the Haleys filed extensions when necessary and have paid what was required.”
What the AP doesn’t tell you, that everyone in the biz knows, is that accountants like Haley likely don’t know a damn thing about taxes. There’s nothing to indicate that she has work experience as a tax accountant. It’s a common misconception amongst non-beancounters that accountant = tax genius. Obviously this is bullshit and that the truth of the matter is that most non-tax accountants would rather chew broken glass than even consider picking up a Master Tax Guide.
Further, since Haley and her husband’s income has nearly tripled since the year she was elected to the SC house, they probably started using a CPA and got used to blowing off their taxes until October. Happens all the time.
Besides, since Ms Haley is endorsed by Sarah Palin and the Tea Party, this can only strengthen her base with these people. They only wish they had the money and the fortitude to blow off their tax responsibilities like Ms Haley.
We do have some specific details for assurance associates in New York and they don’t sound terrible:
NYC first year associate went from $55k to $64k, associate raises [are] coming in around 11-18%
So if you’re keeping score at home (and we know you are) it appears that the partner at E&Y who prognosticated that raises at his firm would beat PwC’s Raises appears to be right in some cases but perhaps not all.
Sooo, Ernie troops – are you happy? Disappointed? Suicidal? Ready to jump ship? Or calling your friends at PwC to brag how you’re keeping the pace? Discuss.
Last we had heard of Thomas Flanagan, Deloitte had just taken him to the woodshed, successfully suing him for breach of fiduciary duty, fraud, and breach of contract related to Tom’s insider trading activities of Deloitte clients.
Now it’s the SEC’s turn to get in on this sweet action. The Commission charged Flanagan and his son, Patrick Flanagan for insider trading of Deloitte clients including Best Buy, Sears, Walgreens and Motorola.
Why Flanagan, the 38-year veteran of Deloitte and Vice Chairman of Clients and Markets, who thought that in the twilight of his career, the best move would be to engage in some insider trading is still a mystery. Since he was presumably pushing 60, one couldn’t help but wonder if perhaps his memory was going and he just totally spaced the independence thing.
But actually, no. Turns out, Tom Flanagan is just a liar:
According to the SEC’s complaint, Thomas Flanagan concealed his trades in the securities of Deloitte’s clients and circumvented Deloitte’s independence controls. He failed to report the prohibited trades to Deloitte, lied to Deloitte about his compliance with its independence policies, and provided false information to Deloitte’s personal income tax preparers about the identity of the companies whose securities he traded.
Flanagan & Son will be paying over $1.1 million in disgorgement and fines for their little stunt. And Robert Khuzhami had a little reminder for anyone else out there that thinks they can get cute, “Flanagan’s insider trading violated one of the most fundamental rules of public accounting. All audit firms should learn from this unfortunate episode and employ vigorous controls designed to ensure compliance with the SEC’s auditor independence rules.”
Apparently there’s been a bit of unnecessary confusion out there about the deductibility of marijuana for medical purposes. The Wall St. Journal article that we linked to this morning discusses the problems employers are encountering wi e.g. can’t use HSA funds; they don’t care if you’ve got a card, if you test positive you’re fired).
But the question of deducting the cost of your White Widow et al. that you legally purchase in states like California and Colorado has been making the rounds. After a little discussion, it’s pretty clear that the IRS is not going allow you deduct your pot for tax purposes simply because it’s still illegal at the Federal level. Doctor’s note be damned.
The confusion arose due to the following letter that was sent to New York Senator Chuck Schumer, who had sent a letter to the IRS inquiring about a constituent using a “herb” to treat migraine headaches:
As with many facets of how to treat medical marijuana for tax and other purposes, it appears that those in charge are merely tiptoeing around the question. In the letter, the term “marijuana” is never used explicitly – the term used is “herb”. While it’s my understanding that the specifics of the case involved medical marijuana used for the treatment of migraines, that isn’t specifically stated in the sanitized version of the letter. No use of “marijuana”, just the term “herb.” That could be St. Johns Wort or milk thistle as far as the IRS is concerned.
Fortunately TaxProf Paul Caron clears up for us in a couple of updates from his latest post on this issue:
Update #2:Rev. Rul. 97-9, 1997-1 CB 77, specifically precludes a medical expense deduction for medical marijuana:
An amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not a deductible expense for medical care under § 213. This holding applies even if the state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a prescription.
So the IRS in Info. 2010-0080 either was (1) signalling a retreat from its position in Rev. Rul. 97-9 by not mentioning the federal legality of the substance; (2) implicitly referring only to legal herbs (and hence not covering marijuana).
Update #3: I am told by an enterprising reporter that the herb in question in Info. 2010-0080 is Petadolex, so it appears that interpretation #2 above controls and the conclusion in Rev. Rul. 97-9 denying a medical expense deduction for medicial marijuana still obtains.
So there you have it. Regardless if you have glaucoma, cancer, HIV, chronic pain, high anxiety or any ailment that marijuana can effectively alleviate, don’t bother trying to include it on Schedule A. We’d ask the IRS to implore a little common sense here but legally, as long as marijuana remains illegal at the federal level that’s not going to happen. And from a more practical standpoint, we’re still talking about the IRS.
The Office of Professional Discipline voted on July 19th to take away the most coveted letters in the accounting profession from the convicted “auditor.” LoHud quotes part of the decision issued by the state, “When each opinion was issued (Friehling) knew that no audit or any examination had been conducted of said financial statements.”
Obviously the OPD made the right decision here but it begs the question: what the hell took so long? Call us impatient or simply devoid of tolerance for a slow moving bureaucracy but it’s not like this one was a toss-up. Do these Professional Discipline folks only meet semi-annually? Were the waiting out the possibility of SCOTUS overruling the conviction a la Andersen?
But never mind that. Friehling has to be devastated with this latest setback. All that studying for nothing! He took the written CPA exam, people. Some of you are familiar with that particular bit of torture but for you younger CPAs, believe us when we tell you that it’s no picnic.
Plus, that CPA jail-tattoo he was looking forward to getting on his neck simply won’t have the same meaning.
K-V Pharmaceutical Company (NYSE: KVa/KVb) announced today that the Audit Committee of its Board of Directors has engaged BDO USA, LLP (“BDO”) as the Company’s independent registered accounting firm.
The Company and BDO will commence work immediately on the planning, audit and filing of the fiscal year 2010 Form 10-K and will then follow with the review of its quarterly filings for fiscal year 2011. K-V’s fiscal year end is March 31.
Mr. Mark Dow, Chair of the Board’s Audit Committee, stated, “The Audit Committee and the entire Board is pleased to be able to announce the selection of BDO as the Company’s new accounting firm. BDO has extensive knowledge of the pharmaceutical industry and also a previous relationship with K-V, and the Company believes BDO will be able to assess and complete its audit of the Company’s Fiscal Year 2010 financial statements expeditiously. We look forward to working closely with BDO to bring the Company back into compliance with all of its Securities and Exchange Commission filings as quickly as possible.”
Right! Staying compliant! That sounds a bit maj. Not only that but the New York Stock Exchange (sort of of a big deal in their own right) is sick of KV stinking up their big board with their 30-day average stock price hovering under $1.
The company has assured the NYSE that they’re on this stock price problem, “The Company will furnish to the NYSE on or prior to August 10, 2010 a response affirming its intent to cure this deficiency and outlining the steps it is currently taking and plans to undertake in the near term to restore compliance with the NYSE’s continued listing standards.”
Let’s just say BDO has their work cut out. KV has no internal controls to speak of, is having trouble convincing the FDA their products are safe and the SEC and NYSE breathing down their necks. Now maybe this won’t all translate into the auditors’ magic wand but there’s got to other potential clients in the St. Louis area with far less drama.
IASB proposals aim to demystify insurance accounting [Accountancy Age]
“The international accounting standard setter has released new proposals for insurance contracts which seek to demystify one of the most complex areas of company reporting.
The rules, announced yesterday, aim to transform current rules, said to be all but indecipherable for investors, to a model which helps to communicate the contract economics.”
‘Static Kill’ Appears to Be Working in Well, BP Says [NYT]
“BP said Wednesday it had brought pressure under control in its stricken well in the r pumping heavy drilling mud into it, calling the development a “significant milestone” in its efforts to permanently seal the well.
The company began the effort, known as a static kill, on Tuesday afternoon and stopped pumping the heavy mud after about eight hours, saying that the procedure appeared to have reached the “desired outcome” of controlling pressure in the well.”
American Accounting Association and AICPA Create Pathways Commission to Study the Future of Accounting Higher Education [PR Newswire]
“The American Accounting Association and the American Institute of Certified Public Accountants together have formed the Pathways Commission to study possible future paths of higher education for those seeking entry into the accounting profession.
‘Interest in accounting as a career is the highest it’s ever been and underscores the need to make sure the educational infrastructure remains solid and able to meet the profession’s evolving requirements,’ said Barry Melancon, CPA, AICPA president and CEO, who served on the Human Capital Subcommittee of the U.S. Treasury Advisory Committee on the Audit Profession.”
Catch of the day: ESPN sells fishing organization [Bloomberg]
Apparently a former Deloitte CEO – Jim Copeland – is involved in a group buying the BASS fishing organization.
From Playboy to Biglaw: New Orrick CFO Has A Bitchin’ Resume [ATL]
A former Playboy CFO recently joined Biglaw firm Orrick, Herrington & Sutcliffe, presumably because access to a nice grotto is a must.
Getting Customers to ‘Check In’ With Foursquare [WSJ]
“Businesses of all sizes are trying the services out, looking to tap the networks’ ever-growing fan bases—Foursquare alone has 2.4 million users globally, and is growing 30% to 40% a month—and ability to harness enthusiasm for local establishments. For a small company with a limited marketing budget, the services are attractive because they’re free or cheap, require minimal time and effort, and appeal to loyal consumers who favor local businesses over big, cookie-cutter chains.”
Another Question about Timing of NBTY Insider Stock Purchases Prior to Announcement of Carlyle Acquisition [White Collar Fraud]
Sam Antar is still a little suspicious about the timing of the two NBTY directors that purchased stock right around the time that the Carlyle Group agreed to purchase NBTY stock. According to filings, NBTY executives met with Carlyle on May 11th and the two directors in question purchased their shares on May 13th and 18th. The next regularly scheduled board meeting was on May 21st.
Soooo, Sam wonders aloud, “At what point in time did Ashner and White know anything about the discussions with Carlyle and when did they find out about the confidentiality agreement? Often, such agreements are executed after the board has been notified. In this case, the confidentiality agreement was signed before Ashner and White purchased their NBTY shares.”
At Work, a Drug Dilemma [WSJ]
Even if you are legally able to purchase pot for medicinal purposes, your employer may still prefer you to pass on grass.
“Instead of reprising their partisan, tiresome, and largely unproductive argument about what to do with the Bush tax cuts, President Obama and Congress ought to be asking a very different question: How do we build a tax system capable of generating the revenues we need to fund the government we want in the most efficient and fair way possible?”
Good question, you say? If you mosey around the web for a nanosecond, you’re likely to run into an article that is debating whether or not the 43rd President’s tax cuts from 2001 and 2003 should be continued. Since Nancy Pelosi is determined to get a vote on this pre-election day, the political rhetoric on this issue is flowing like a river of sewage you dare not dream of.
To help you make sense of it all, we perused some of the tax wonkiest corners of the web to bring you some perspective. And of course, some less bright observations.
• The Tax Foundation has a breakdown of how the expiration of the tax cuts would affect “Average Middle-Income Family, by State and Congressional District.” It’s simple to find your state/district to see the effect that the expiration of the cuts would have on you.
• Over at the Journal, Washington Wire presents the biggest winners and losers from the tax cuts being extended:
Among the states that would save the most from extending the tax cuts, according to a draft of the study: Alaska ($1,959 per family); Connecticut ($1,903); Maryland ($1,756); Massachusetts ($1,831); New Jersey ($1,860) and Utah ($1,779). The lowest savings for middle-income families would be in D.C. ($1,237); West Virginia ($1,316); and Mississippi ($1,355).
• Apparently Alan Greenspan still has a shred of credibility left because he weighed in a couple of weeks ago, telling Bloomberg, “I should say they should follow the law and let them lapse.”
• The Beard doesn’t agree with his predecessor, telling the House Financial Services Committee, “In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy. There are many ways to do that. This is one way.”
• William G. Gale, a senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center, wrote in the Washington Post about five myths around the tax cuts, including their affect on small businesses:
One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to “a job-killing tax hike on small business during tough economic times.”
This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets — individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.
• Derek Thompson is a little more pragmatic than most, arguing that President Obama should extend them for a year in order to buy some time to work on comprehensive tax reform:
The president should extend the Bush tax cuts — yes, the whole dang thing — for a year to temporarily silence his critics. Then he should use 2011 to knock it down and build a tax system that’s right for the next decade. Working off a bipartisan plan, real tax reform would simplify the income brackets and eliminate the multitude of deductions and exemptions that distort the economy with bad incentives and leave hundreds of billions of dollars on the ground.
• Fred Thompson (no relation that we know of) is using his camera moxie to voice his support for the extension of the cuts:
The cuts for the rich are likely to be extended for at least two years. The cuts for the middle class are sure to be extended for even longer than that. Total cost to the deficit over the next 10 years? More than $3 trillion, and maybe more than $4 trillion.
But according to a Pew poll, the American public isn’t as sure about this as the politicians are. A slight plurality — 31 percent — want all the tax cuts repealed. Thirty percent want the cuts for the rich extended. In other words, opinion is divided.
• And even though she needed crib notes, Sarah Palin managed to tell Fox News’ Chris Wallace that letting the cuts expire ‘idiotic’:
“[Obama’s] commitment to let previous tax cuts expire are going to lead to even fewer job opportunities for Americans,” Palin said. “It’s idiotic to think about increasing taxes at a time like this.”
“My palm isn’t large enough to have written all my notes down on what this tax increase, what it will result in,” Palin continued.
Host Chris Wallace noticed that Palin did indeed have something written on her palm. “Can I ask you, what do you have written on your hand?” he asked.
“$3.8 trillion in the next 10 years,” Palin responded, “so I didn’t say $3.7 trillion and then get dinged by the liberals saying I didn’t know what I was talking about.”
But who would ever get the idea that Sarah Palin didn’t know what she was talking about?
By now everyone is borderline freaking out due to Deloitte partners’ ability to remain coy throughout this process, using words like “substantial” and “better than last year” which, considering the love shown last year, is ironically accurate.
Annnnnnddd it continues. A source dropped us part of an email from Nick Tommasino, Deloitte’s Chairman and CEO of audit and enterprise risk services:
Understand your compensation package
• Deloitte provides a comprehensive Total Rewards package, which is designed to:
· Attract, retain, motivate, recognize, & reward high-performing talent
· Demonstrate the value of individual contributions as it relates to business performance
• When your individual compensation discussions occur in mid-Aug, keep in mind these main financial components of the Total Rewards package:
· Base salary
· AIP*, aimed at eligible high-performing seniors, managers, & senior managers (Reminder: AIP payouts will be subject to taxation & 401k deductions)
· Rewards & Recognition program, which includes Applause Awards, Outstanding Performance Awards, Promotion Awards, & Service Anniversary Awards
• Key compensation dates include:
· Mid-Aug: Compensation discussions begin
· Sun, Aug 22: New salaries effective
· Thu, Sep 2: Updated compensation statements available on DeloitteNet
· Fri, Sep 3: New base salary & AIP award amounts reflected in pay statements available on DeloitteNet
The motivation behind such a message is subject to interpretation. Some may think this is a friendly reminder (one of several, no doubt) of the upcoming discussions OR it’s a friendly reminder that doubles as a reality check that this isn’t 2005-2006.
Meanwhile, in the consulting part of the house, one commenter is claiming that news is going to be extra good, courtesy of some Punit Renjen prognostication:
Punit said “Compensation will be highest in history” via video for Consulting…
So who knows! The good news is that you will know soon enough but numbers remain a mystery. Unless someone finally coughed up a range. In that case, we strongly encourage that you share.
Before you go!
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When Young Buck woke up yesterday morning, he probably wasn’t expecting IRS agents armed to the teeth barging in and taking everything in sight.
As we’ve mentioned, it’s been a rough summer – hell 
Good question, you say? If you mosey around the web for a nanosecond, you’re likely to run into an article that is debating whether or not the 43rd President’s tax cuts from 2001 and 2003 should be continued. Since